I know our EBITDA looks good on paper, but when we sit down with potential buyers, what are they actually looking to write a check for, and how do we show them that value is transferable?

Question

Tyler Smith · Accepted Answer

Buyers do not write checks for your history. They write checks for your future. When a buyer looks at your business, they are evaluating the predictability, scalability, and transferability of your cash flow. If your revenue is tied to your personal relationships or your unique problem solving skills, you do not have an institutional asset. You have a high paying job.

Buyers pay for a business that operates smoothly without its owner. This means they are buying your operating system. They look at your Accountability Chart to see if every seat is filled by someone who has the GWC™, which means they Get it, Want it, and have the Capacity to do it. They look at your Process Component to ensure your core processes are documented and followed by all. This proves the business can replicate its success under new ownership.

In the Step by Step Exit framework, we call this the quality of the business. A high quality business commands a premium multiple because it carries low risk. To show buyers this value is transferable, you must present a self sustaining leadership team that runs the weekly Level 10 Meeting™ without you. When the buyer sees that you can take a thirty day vacation and the business grows, they see an asset worth paying a premium for. Stop focusing solely on boosting revenue. Focus on building the systems that make that revenue repeatable.